The Financial Services and the Treasury Bureau, jointly with the Hong Kong Monetary Authority, the Securities and Futures Commission and the Insurance Authority (together, Authorities) published their conclusions on the consultation relating to the proposed regulations on protected arrangements (PARs) under the Financial Institutions (Resolution) Ordinance (Ordinance) on 6 April 2017.
The Ordinance was enacted by the Legislative Council on 22 June 2016. It sets out the framework for a cross-sector regime for the orderly resolution of failing financial institutions in Hong Kong (see our earlier e-bulletin for an overview of the regime).
Before the Ordinance commences operation, necessary subsidiary legislation under the Ordinance needs to be formulated and passed. On 22 November 2016, the Authorities published a consultation paper in relation to the PARs to be made under section 75 of the Ordinance (see our earlier e-bulletin for an overview of this consultation paper). The consultation paper invited views on the scope and the degree of protection for the different classes of protected arrangements in a partial property transfer or bail-in situation, as well as the remedial actions to be taken by a resolution authority should its actions inadvertently result in the constituent parts of a protected arrangement being treated otherwise than as envisaged in the regulations.
The consultation ended on 21 January 2017. Respondents were broadly supportive of the policy intent behind the PARs and provided constructive and technical input on the questions posed in the consultation paper. Our recent e-bulletin provides an overview of the key feedback from the respondents and the conclusions reached by the Authorities.